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Marsh posts higher Q4 revenue, lower profit

Dan Glaser

Marsh & McLennan Cos. Inc. reported positive revenue and organic growth for the fourth quarter of 2020 despite the challenging economic environment and predicts a return to underlying growth of 3- 5% this year, the brokerage’s top executive said Thursday.

Price increases continue to be pervasive in both the property/casualty insurance and reinsurance markets overall as 2020 saw elevated loss activity from the historic pandemic and low interest rates, presenting challenges for clients, Dan Glaser, president and CEO told analysts on an earnings call.

Marsh & McLennan’s performance in 2020 — “a year like no other” — was “nothing short of remarkable,” he said.

“While the global pandemic will most likely dominate at least the first half of 2021 there are brighter days ahead,” Mr. Glaser said.

Marsh & McLennan reported fourth-quarter revenue of $4.42 billion, a 4% increase over the same period in 2019, while underlying or organic revenue growth was 1%, according to the brokerage’s earnings statement.

Full-year revenue rose 3% from 2019 to $17.22 billion, or 1% on an underlying basis.

Risk and insurance services, its insurance and reinsurance broking business, reported fourth-quarter revenue of $2.53 billion, a 6% increase overall and a 3% increase on an underlying basis, or 4% excluding a decline in fiduciary interest.

Marsh LLC, its commercial insurance unit, reported $2.36 billion in revenue, a 7% increase over 2019’s fourth quarter and 4% on an underlying basis, “finishing the year strong,” Mr. Glaser said. Marsh’s U.S. and Canadian underlying revenue rose 7%, but international revenue was flat due to a 2% decline in revenue in Europe, the Middle East and Africa. Revenue from Latin America grew 3% on an underlying basis, while Asia Pacific saw underlying growth of 1%.

Guy Carpenter & Co. LLC, the company’s reinsurance brokerage, reported $162 million in fourth-quarter revenue, up 5% on an underlying basis.

Marsh & McLennan’s profit for the fourth quarter was $374 million, a 4.3% decline from $391 million in the year-earlier period. The profit for the full year was $2.02 billion, a 16% increase from $1.74 billion in 2019.

The fourth quarter of 2020 marked the 13th consecutive quarter of rate increases in the commercial property/casualty marketplace, Mr. Glaser said.

The Marsh Global Insurance Market Index showed price increases of 22% year over year, up from 20% in the third quarter.

At January renewals commercial insurance market conditions remained challenging across products and regions, Mr. Glaser said.

“Risks are able to be placed although at higher prices, and in some cases with less coverage and stricter terms. Insurers continue to push for rate increases in the face of losses, low returns and interest rates,” he said.

Global property insurance was up 20% in the fourth quarter, and global financial and professional lines were up 47%. Global casualty rates rose 7% on average, and U.S. workers compensation pricing declined modestly.

Small and mid-market pricing also continues to rise, though the magnitude of increases is less.

“At Jan. 1 reinsurance renewals, while pricing ultimately settled at the lower end of our predictions, negotiations were lengthy and complex, with significant focus on coverage and structure,” Mr. Glaser said.




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